06 February 2017


The Australian National Audit Office report on the Commonwealth's $4bn Indigenous Advancement Strategy states that
The audit objective was to assess whether the Department of the Prime Minister and Cabinet has effectively established and implemented the Indigenous Advancement Strategy to achieve the outcomes desired by government.
The ANAO comments
1. In September 2013, responsibility for the majority of Indigenous-specific policy and programs, as well as some mainstream programs that predominantly service Indigenous Australians, was transferred into the Department of the Prime Minister and Cabinet (the department). These substantial changes saw 27 programs consisting of 150 administered items, activities and sub-activities from eight separate entities moved to the department.
2. In May 2014, the Indigenous Advancement Strategy (the Strategy) was announced by the Australian Government as a significant reform in the administration and delivery of services and programs for Indigenous Australians. Under the Strategy, the items, activities and sub-activities inherited by the department were consolidated into five broad programs under a single outcome. The Australian Government initially committed $4.8 billion to the Strategy over four years from 2014–15. The 2014–15 Budget reported that the Australian Government would save $534.4 million over five years by rationalising Indigenous programs, grants and activities.
3. In the first year of the Strategy, from July 2014 to June 2015, the department focused on transitioning over 3000 funding agreements, consolidating legacy financial systems, administering a grant funding round and establishing a regional network.
Audit objective and criteria
4. The objective of the audit was to assess whether the department had effectively established and implemented the Indigenous Advancement Strategy to achieve the outcomes desired by Government.
5. To form a conclusion against the audit objective, the Australian National Audit Office (ANAO) adopted the following high-level audit criteria:
  • the department has designed the Strategy to improve results for Indigenous Australians in the Australian Government’s identified priority areas; 
  • the department’s implementation of the Strategy supports a flexible program approach focused on prioritising the needs of Indigenous communities; 
  • the department’s administration of grants supports the selection of the best projects to achieve the outcomes desired by the Australian Government, complies with the Commonwealth Grants Rules and Guidelines, and reduces red tape for providers; 
  • the department has designed and applied the Strengthening Organisational Governance policy to ensure funded providers have high standards of corporate governance; and 
  • the department has established a performance framework that supports ongoing assessment of program performance and progress towards outcomes.
6. The audit examined the department’s activities relating to the Strategy’s establishment, implementation, grants administration and performance measurement leading up to the Strategy’s announcement in 2014 and its initial implementation until the audit commenced in March 2016.
7. While the Department of the Prime Minister and Cabinet’s design work was focused on achieving the Indigenous Advancement Strategy’s policy objectives, the department did not effectively implement the Strategy.
8. The Australian Government’s identified priority areas are reflected in the Strategy’s program structure which is designed to be broad and flexible. The department considered the potential risks and benefits associated with the reforms. Planning and design for the Strategy was conducted in a seven week timeframe, which limited the department’s ability to fully implement key processes and frameworks, such as consultation, risk management and advice to Ministers, as intended.
9. The implementation of the Strategy occurred in a short timeframe and this affected the department’s ability to establish transitional arrangements and structures that focused on prioritising the needs of Indigenous communities.
10. The department’s grants administration processes fell short of the standard required to effectively manage a billion dollars of Commonwealth resources. The basis by which projects were recommended to the Minister was not clear and, as a result, limited assurance is available that the projects funded support the department’s desired outcomes. Further, the department did not:
  • assess applications in a manner that was consistent with the guidelines and the department’s public statements; 
  • meet some of its obligations under the Commonwealth Grants Rules and Guidelines; 
  • keep records of key decisions; or 
  • establish performance targets for all funded projects.
11. The performance framework and measures established for the Strategy do not provide sufficient information to make assessments about program performance and progress towards achievement of the program outcomes. The monitoring systems inhibit the department’s ability to effectively verify, analyse or report on program performance. The department has commenced some evaluations of individual projects delivered under the Strategy but has not planned its evaluation approach after 2016–17